The way it worked out, Verizon Wireless will be barred from cross-marketing cable and wireless services in Verizon Communications Inc. (NYSE: VZ) FiOS markets. But Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), Cox Communications Inc. and Bright House Networks will have the green light to combine cable and wireless in all their markets, including FiOS territories.
That condition falls short of one Sprint Corp. (NYSE: S)'s had asked for in filings with the Federal Communications Commission (FCC) , which is still reviewing the order, but already appears to have the blessing of Chairman Julius Genachowski. Sprint wanted to prevent Verizon Wireless and its cable partners from bundling services in FiOS areas. (See Sprint Wants to Snip the Verizon/Cable Bundle.)
But the DoJ's proposed settlement only places that restriction on Verizon Wireless, reasoning that it will keep Verizon Communications incented to compete against the cable companies. The DoJ is also removing a contractual restriction that prevented Verizon Wireless from co-marketing FiOS. (See Comcast, Verizon & TWC Bundle Up and Comcast/Verizon Combo Steers Clear of FiOS.)
The co-marketing agreements "as originally structured would have required Verizon Wireless to sell the cable companies' services on an 'equivalent basis' with FiOS where FiOS is available, thereby reducing Verizon's ability and incentive to sell its own services aggressively," the DoJ said.
Verizon Wireless does have the okay to bundle cable services in Verizon Communications markets with DSL but only until 2016 (that date can be extended with the DoJ's blessing). The DoJ thinks that could give Verizon Communications an opportunity to "reconsider" its decision to stop building out FiOS and to bring its FTTH platform to DSL territories.
Here's a snapshot of FiOS markets where Verizon Wireless won't be allowed to bundle cable services:
|Market||Incumbent Cable Operator|
|Tampa Bay, Fla.||Bright House|
|Philadelphia, Pa. (and parts of N.J.)||Comcast|
|Rhode Island and other parts of New England||Cox|
|Los Angeles||Time Warner Cable (and some Comcast)|
|New York, N.Y.||Time Warner Cable|
|Dallas, Texas||Time Warner Cable|
Here are some other conditions and amendments that the DoJ is proposing:
- In five years, the DoJ will lift a rule that bans the MSOs from selling wireless services from Verizon Wireless's competitors. After that, they can partner with whomever they want.
- The MSOs can elect to resell Verizon Wireless services under their own brand "at any time." The original deal between them didn't allow that MVNO option to come into play for four years.
- The DoJ will let Verizon Wireless and its cable partners operate an innovation/technology joint venture that was also worked into the original spectrum and associated marketing deals, but they must dissolve it by December 2016, unless the government gives them permission to extend it. As reported earlier, Sam Schwartz, president of Comcast Converged Products, is leading the J.V.'s strategic development, and Tony Heyman, VP of new product development at Verizon Wireless, is heading up its operations and distribution.
— Jeff Baumgartner, Site Editor, Light Reading Cable